Leeds City Council (202224994)

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REPORT

COMPLAINT 202224994

Leeds City Council

31 July 2023

 

Our approach

The Housing Ombudsman’s approach to investigating and determining complaints is to decide what is fair in all the circumstances of the case. This is set out in the Housing Act 1996 and the Housing Ombudsman Scheme (the Scheme). The Ombudsman considers the evidence and looks to see if there has been any ‘maladministration’, for example whether the landlord has failed to keep to the law, followed proper procedure, followed good practice, or behaved in a reasonable and competent manner.

Both the resident and the landlord have submitted information to the Ombudsman, and this has been carefully considered. Their accounts of what has happened are summarised below. This report is not an exhaustive description of all the events that have occurred in relation to this case, but an outline of the key issues as a background to the investigation’s findings.

The complaint

  1. The complaint is about the landlord’s actions when recovering rent payments directly from the resident’s Universal Credit (UC) payments.

Background

  1. The resident has a secure tenancy agreement with the landlord.
  2. The resident’s employment circumstances changed in September 2022, which meant their income was impacted. The resident arranged with the landlord to amend the frequency of their rent payments, from monthly to weekly, on 9 November 2022.
  3. The resident was contacted on 10 November 2022 by Department for Work and Pensions (DWP) who told them that the landlord would be paid directly from their UC entitlement. DWP confirmed this request had been made by the landlord. DWP also confirmed it had declined a request for UC payments to be used for rent arrears, as the outstanding balance had been less than 2 months’ rent.
  4. The resident disagreed with this arrangement and made a complaint to the landlord. The landlord responded on 16 November 2022, outlining its approach to arrears and UC payment requests. It said it would often apply for direct payments when an account is in arrears. The landlord stated the resident had been in arrears at the time their direct debit had been cancelled, to change from monthly to weekly payments. The landlord said this had automatically prompted the request to DWP for direct payments via the resident’s UC, but if the resident’s arrears continued to decrease the direct payments would not be needed.
  5. The landlord claimed that DWP was at fault and should have checked the request for direct payments. The landlord said DWP had incorrectly assessed the request and that the resident could have also rejected the request via their UC account.
  6. The resident remained dissatisfied with the landlord’s response and requested escalation to stage two of the complaint process. The resident said the landlord’s response had been inaccurate and that they had spoken to DWP which said it would not have been able to reject the request for direct payments.
  7. The landlord provided a stage two complaint response on 5 January 2023. The landlord said the resident had been in rent arrears and that it had discussed direct payments from UC with the resident in November 2022. It had made the decision to make the request to “assist in honoring the contractual obligation”. The landlord said it had not received any payments towards the resident’s arrears, as DWP had rejected that part of the request. It confirmed the only payment that had been received was for the resident’s rent. However, the landlord acknowledged that the request should not have been made. It also said that the arrangement had been cancelled after it received the resident’s complaint in November 2022 and that it would normally make a repayment, but due to arrears it would not do so on this occasion.
  8. The resident remained dissatisfied and contacted the Ombudsman. They said the landlord had given misleading information about who had been responsible for the request to pay their rent directly through their UC and how to cancel the arrangement. To resolve their complaint, the resident asked for the landlord to admit its error, refund any duplicated payments, and make a goodwill payment for the stress and inconvenience.

Assessment and findings

  1. The tenancy agreement confirms that the resident would be responsible for ensuring rent is paid in full and on time. The landlord’s rent arrears policy states that the landlord takes a “preventative approach” to arrears. It should make early contact with a resident whose rent account goes into arrears to prevent the debt from escalating. It should also work with the resident to reach a satisfactory agreement to repay any arrears.
  2. The landlord has provided evidence that suggests contact was made with the resident each time their account entered arrears. It also shows the landlord had called the resident on 9 November 2022 to discuss the arrears. The telephone note said a request for an alternative payment arrangement (APA) and third-party deduction (TPD) was made on the same date. The decision to make the request had been made due to the resident being classified by the landlord as an “irregular payer”.
  3. The landlord’s rent arrears policy refers to the criteria for requesting a TPD. It states the resident must:
    1. Owe more than four weeks total gross rent.
    2. Be in receipt of either income based personal benefits (job seekers allowance, employment support allowance or income support).
    3. Be in receipt of Housing Benefit.
  4. The landlord also said in its complaint response that “we [the landlord] will have a look at payment patterns and arrears and if a resident is in arrears and/or has sporadic payments we will often apply for direct payment from Universal Credit”. However, the resident’s circumstances at the time meant they did not fulfil the criteria for the sort of arrangement the landlord had requested.
  5. The landlord should have completed its own due diligence prior to making the request for an APA and a TPD. While the landlord’s claim that DWP was responsible for approving the arrangement was accurate, it was the landlord’s responsibility to make sure the request was made under the right circumstances. The landlord acknowledged – both internally and with the resident – that these arrangements should not have been requested in the first instance, as the resident did not meet the criteria. The request may have been made in “good faith”, as suggested by the landlord, but it meant the resident was charged twice for their weekly rent, as a UC deduction was made, and the resident also paid directly. This would have caused distress and inconvenience to the resident and would have impacted their financial situation, which the landlord was aware of as being challenging at the time.
  6. The landlord’s stage one response to the resident suggested the resident could have “rejected” the requested arrangement. The landlord later confirmed this information to be inaccurate during internal communication but did not inform the resident of this. The landlord’s responses to the resident should have been clear and accurate, setting out how the requested arrangements were made and the process for cancelling them, if appropriate. However, the inaccurate information it provided, particularly at stage one of the complaint process, is likely to have caused the resident some confusion.
  7. There was also a delay in requesting cancellation of the arrangement. In a letter to the resident, the DWP confirmed the arrangement was discussed with the resident on 10 November 2022. The resident states they contacted the landlord immediately after being informed of the arrangement by DWP. The letter to the resident from DWP states the landlord did not request cancellation of the arrangement until 9 December 2022, which meant the UC payments were made for 4 weeks prior to being cancelled. Had the landlord acted sooner, it would have been a much shorter time for the resident to have had the issue outstanding.
  8. While the landlord demonstrated a willingness to put things right by contacting DWP and cancelling the UC deductions, it delayed the cancellation by not acting sooner. It also failed to provide accurate information in response to the resident’s concerns about the APA and TPD requests. The resident had been left unsure of how to cancel the arrangement, who had been responsible for it and was also making duplicate rent payments while it was in place. Given the failure to provide accurate information, the Ombudsman has found the landlord must act to put things right for the resident.
  9. The Ombudsman’s approach to compensation is set out in our Remedies Guidance, published on our website. The Guidance suggests that awards of £100 to £600 may be appropriate for cases where the landlord has made an error which adversely affected the resident. The Ombudsman acknowledges the landlord admitted an error in making the request to DWP, but we have found a compensation payment of £150 to be proportionate to the delay in cancelling the arrangement and misinformation given in response to the resident’s concerns.
  10. The Ombudsman will not be ordering a refund of the duplicate payments, as the landlord has provided evidence to show the resident’s account had been in arrears at the time. Therefore, it was appropriate for the landlord to use those payments to cover the resident’s rent and to decrease any arrears, given the resident’s obligation to ensure rent is paid in full and on time.

Determination

  1. In accordance with paragraph 52 of the Housing Ombudsman Scheme, this Service has found service failure by the landlord in its actions when recovering rent payments directly from the resident’s Universal Credit (UC) payments.

Orders and recommendations

Orders

  1. The landlord is to pay the resident compensation of £150 for the delay in cancelling the arrangement and misinformation provided during the complaint process.
  2. In line with the Ombudsman’s approach to compensation awarded by our Service, the landlord must pay the £150 compensation directly to the resident and not use it to clear any arrears or outstanding debt.
  3. The landlord must confirm compliance with the above order within four weeks of the date of this report.

Recommendations

  1. The landlord should run refresher training for all relevant staff on the criteria for requesting an APA or TPD.
  2. The landlord should run refresher training for all relevant staff on complaint handling, particularly on providing clear and accurate responses.